Benin report - Institut Africain de la Gouvernance

CHAPTER FIVE: CORPORATE GOVERNANCE__________________________________________________________________________The tax system is based on declaration, in which a payment of 25% of theprevious year‟s taxes is made as an advance every quarter. In cases wheremore tax is paid than is actually due, the taxpayer loses a lot of timecollecting it and even risks the chance of not getting what he/she is due.VAT refunds always come very late – between six months and four years,according to some CRM respondentsThe tax system is too complex: a recently published report on the PrivateSector Recovery Programme 57 identifies 96 taxes, dues and dutiescollected by the state or local authorities. These taxes and dues paralyseprivate initiative as much as the tax services, which are obliged to handle96 control systems.In cases of conflict with the tax services, a taxpayer first pays all the sumsowed before taking the matter before the courts. If he/she happens to winthe case, he/she would receive a tax credit which, according to the CRMrespondents, is hardly effective and a source of corruption by some taxworkers 58 .The 2007 Finance Law provides that any readjustment by a tax inspectormust be justified, and that such an inspector is liable to sanction if he/shedoes not give such justification. Still, the absence of real tax consultants,the outdated tax code, and the failure to circulate the tax services‟ internalmemos tend to weaken enterprises and virtually make them dependent onthe tax inspectors. This situation also opens the doors to excesses andcorruption.Even when an enterprise incurs losses, it is obliged to pay a minimum taxof 200,000 CFA franc.Businesses with a turnover of less than 40 million CFA franc, and serviceproviders whose turnover does not exceed 15 million CFA franc, may paya flat rate tax.If traders and enterprises are over-taxed, the individual capital gains areexempted from tax.Tax payments or refunds are often the hotbeds of corruption.644. Although Benin‟s three SAPs provided for reforms to modernise publicfinance and tax services, and though the state launched a programme in 2006to broaden the tax base, the scope of the government‟s actions remains limited.This is due to users‟ poor knowledge of the laws and their lack of a „taxculture‟. This prompted the government to publish a handbook of taxprocedures that is little known within business circles.57 PASP, June 2007. Elements of Advocacy on Taxation, Preliminary version.58 This procedure was revised by the 2007 Finance Law, which provides that in the case of a dispute, abank guarantee should be deposited before the matter is taken to a small claims court (rather thansummary procedure).221